Job cost is the actual cost of performing the work associated with the job. These costs would include labor costs, materials costs, subcontractor costs, equipment costs, etc. Typically, general and administrative costs—e.g., the cost of your office lease—are NOT included in job costs, though labor burden is.
Proper job costing helps you to understand how profitable your jobs are by themselves, and helps you understand how many jobs you need in order to support your administrative infrastructure or achieve your profitability targets.
A contractor budgeted $2,000 in labor, $1,000 in materials, and $350 in equipment to complete a job. Based on the time actually spent by the employees (at a properly burdened labor rate), the actual labor cost was $1,950. $942.50 was spent at local vendors on materials, and $407.50 was spent on equipment rental. The complete job cost in this example is $3,300, or $50 below the initial budget. Kudos to the estimator!
Knowify offers a powerful job costing system that can help you track your costs in real-time. We will guide you on the creation of labor burden rates to ensure that you are fully capturing your labor costs in your job costing. We will also help you see where you stand versus your budget at each phase of the job, helping you to stay on track and/or make adjustments while you still can.
Knowify can help both those contractors proficient with job costing and those getting started.For the new ones, the software offers Simple and Advanced job costing modes.
In both modes, Knowify will offer you the option to remove the markup from your proposal to create cost budgets.
For contractors well versed in job costing, they can leverage Professional mode to create a full project plan with the appropriate budgets. This is the recommended mode for those that will cost the project out before drafting a proposal for the customer.
See how it works: